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TPP: Administration Presses Forward

Despite widespread political opposition, President Barack Obama and his trade team remain optimistic that Congress will approve the Trans-Pacific Partnership (TPP) in its lame-duck session, the period between the November 8 general election and the end of Congress’ term in January. In support of its efforts to gain approval, the Administration recently issued a draft statement of administrative action and a U.S. capacity building plan for the TPP, as required by trade promotion authority (TPA) legislation.

Draft Statement of Administrative Action

On August 12, the U.S. Trade Representative (USTR) sent a draft Statement of Administrative Action (SAA) for the TPP to Congress. The TPA legislation requires the President to submit a draft SAA, along with a copy of the final legal text of the Agreement, at least 30 days before he sends the final SAA and proposed legislation for implementing the TPP to Congress. With the August submission, the President could send a proposed implementing bill to Congress by mid-September, but he is not likely to do so.

In the SAA, the Administration describes the legislative measures and administrative actions that will be needed for the U.S. to implement its TPP obligations. The SAA represents the Administration’s “authoritative expression” of its views regarding the interpretation and application of the Agreement with respect to U.S. international obligations and domestic law.

For each TPP chapter, the draft SAA describes the provisions of the implementing bill that would change or affect existing law and the administrative actions it proposes in order to implement the TPP chapter. It also explains why the legislative provisions and administrative actions are necessary to fulfill U.S. obligations under the TPP.

With respect to the TPP chapter on government procurement, the draft SAA points out that the definition of “eligible product” in the Trade Agreements Act of 1979 will need to be amended to apply to the goods and services that the TPP parties cover under the Agreement. That amendment, along with the President’s waiver authority, will allow U.S. federal entities that are subject to the Agreement to purchase, on non-discriminatory terms, goods and services from TPP parties where the value of the procurement is above the thresholds established under the Agreement. This was one of the legislative changes that USTR identified in an April notification.

With respect to administrative action, the Federal Acquisition Regulatory Council (FAR Council) will incorporate TPP thresholds and the TPP parties that are not already covered by the WTO Government Procurement Agreement (GPA) or earlier free trade agreements into the Federal Acquisition Regulation (FAR), in accordance with the Office of Federal Procurement Policy Act.

The draft SAA clarifies that implementation of the TPP will not affect application of the Davis-Bacon Act, a federal law that requires the payment of local prevailing wages on public works projects. In addition, the draft Statement notes that while the TPP Agreement’s rules generally cover state and local laws and regulations, there are exceptions and limitations, such as in government procurement, labor, environment, investment, and cross-border trade in services and financial services. The U.S. has not covered any state or local procurement under the TPP.

USTR Reports to Congress on Capacity-Building for the TPP: On June 30, USTR reported to Congress, as required by the TPA legislation, on the capacity building activities that it will undertake to support its TPP partners’ implementation of the Agreement. The report identified six priority areas for capacity-building activities:

customs and customs-related issues to reduce the risk of duty evasion, circumvention and corruption;

technical barriers to trade, such as promoting transparency in technical standards-setting;

sanitary and phytosanitary measures to ensure that they are based in science and internationally recognized standards;

intellectual property (IP), which includes drafting and revising IP laws;

strengthening environmental protection; and

labor, such as strengthening legal framework for protecting labor rights.

USTR singled out Vietnam as a country that would “need sustained assistance” in making the legislative and regulatory changes that will be needed to meet its TPP obligations. It also noted that other TPP partners would need assistance on key issues. USTR is required to submit this report annually.